Saving vs Investing
This practice involves putting money aside for short-term needs, emergencies, or a "rainy day" with minimal risk.
Saving
The original amount of money deposited by a saver or invested.
Principal
A unit of ownership in a corporation that turns the buyer into a shareholder.
Stock (Share)
The strategy of investing in different industries, sectors, and risk levels to reduce your overall risk of loss
Diversification
A tax-deferred employer retirement plan where employees save part of their paycheck before taxes are taken out. (EMPLOYER SPONSORED)
401K
This process involves taking measures to make your money work for you for long-term goals, but carries no guaranteed return.
Investing
Interest computed on both the original principal AND all accumulated interest
Compound Interest
Profit earned when you sell a stock for a higher price than what you originally paid.
Capital Gain
A group of investments (stocks and bonds) owned by many investors and managed by investment professionals.
Mutual Fund
If your employer offers a 3% match on your $50,000 salary and you put in 3% ($1,500), how much extra money does the company put into your retirement?
Name TWO major advantages (pros) of keeping your money in a savings account.
Low Risk, Easy Access/High Liquidity, or Good for Short-Term Goals
A type of savings account where you agree to leave your money in the bank for a set length of time to earn a fixed interest rate
CD
This stock exchange is entirely electronic with no physical trading floor and features many heavy tech industry stocks.
NASDAQ
Low-risk debt investments issued directly by the U.S. government.
Bonds
With this specific type of IRA, you pay taxes on your income now so that you pay NO taxes when you withdraw money in retirement
RothIRA
This economic factor can reduce the purchasing power of money sitting in a traditional savings account over time
Inflation
A combination savings-investment plan where the bank purchases low-risk government securities, often requiring a minimum balance and limiting transfers per month.
Money Market Account
This stock market index tracks the top 500 largest companies and is considered the best overall measurement of the U.S. market.
S & P 500
E-Trade, TD Ameritrade, Robinhood, and Fidelity do what...
help you buy or sell stocks!
With a Traditional IRA, when do you pay taxes on your money?
When you withdraw the money in retirement
If you start saving $50 a month at age 15 versus $100 a month starting at age 35, you end up with significantly more money by age 65 (roughly $400,000 vs. $150,000) due to this mathematical concept.
Compound Interest
If interest compounds "Quarterly," how many times per year is interest added to the account?
4 Times
Stock prices change constantly because of this core economic principle balancing buyers and sellers.
Supply and Demand
If you buy 225 shares of stock at $2.50/share ($562.50) and sell them for $4.00/share ($900.00), what is your total capital gain?
$337.50
Full-service stockbrokers like Charles Schwab and Fidelity earn this type of fee in exchange for providing advice, retirement planning, and research
Commission